Lettings agents: do landlords really need them?

By Josh Hall

The estate and lettings agent sector has been under the spotlight in
recent months. The Office of Fair Trading (OFT) has recently concluded
an investigation into some of the practices of these firms, and many are
unhappy with its findings.

Dissatisfaction is traditionally high among customers of estate and
lettings agents and this is in no small part to do with the service
levels. As things currently stand, no professional qualification is
required; you could set up as an agent tomorrow with no prior
experience. Many had hoped that the recent OFT report would result in
more regulation, but this has not materialised.

So, with so many people so dissatisfied with lettings agents, do you
really need their services as a professional
landlord?

What do lettings agents do?

On a basic level, the role of a lettings agent is to find suitable
tenants for your properties. This can be a time-consuming task for
landlords, involving writing and placing adverts, arranging viewings,
collecting references and conducting credit checks. Aside from saving
you time, lettings agents are beneficial in this area because they
should also be able to recommend a suitable rental price, which requires
sound knowledge of the market. They may also arrange for your tenant’s
deposit to be lodged with a deposit protection scheme.

Depending on your arrangement with an agent, their involvement may
continue after the contracts (which they will have drafted and provided)
are signed. The agent may collect rent on your behalf, and may take
charge of maintenance and other property management tasks. These extras
will, of course, come at a price.

What about online services?

The growth of online listing services like Rightmove, FindAProperty and
Gumtree have all made the job of both the lettings agent and the private
landlord easier. According to some surveys, around 80 percent of renters
now do all of their house-hunting online, and agents can quickly attract
potential tenants with a well presented listing.

Of course, there is nothing to stop you cutting out the middleman and
creating your own listing without the help of an agent. These services
are easy to use, and will often be enough to secure a tenant; frequently
you will not need to place adverts or listings anywhere else.

If you are considering the DIY option, have a good look at some of the
existing listings on these sites for similar properties. The successful
ads tend to be those that do not rely on hyperbole, but that give a
clear, concise, honest description of the property. Clear photographs
are also a must.

So can you do it yourself, and should you?

Today there is very little preventing you finding your own tenants.
Online listings services are easy to use, and a single listing is often
enough to find you a tenant.

But you should remember that there is significantly more to it than
simply finding tenants. If you choose not to use an agent you may not be
able to credit check potential tenants, which could well cause problems
further down the line. Similarly, you will have to have tenancy
agreements drafted. This can be expensive – but a poorly written
agreement can be even more costly in the long run.

Lettings agents are also particularly helpful when you don’t live near
to your investment property. Once your tenants are installed in the
property, it makes sense to have someone on hand to deal with any
management issues.

On the other hand, you should consider agency fees. The amount you pay
your lettings agent will depend on the range of services they are
providing. Often, an agent will charge a flat rate to secure a tenant.
If you also ask them to fulfil a property management role, they will
normally charge a percentage of the rent.

Ultimately you need to decide whether the agency fee outweighs the
benefits. If you had intended to fulfil the property management role
yourself, it may make sense to also find your own tenants. On the other
hand, if you intend to have an agent manage your property, it would seem
sensible to bring them in from the beginning of the process – to find
and vet your tenants.

Find a reputable agent

If you choose to enlist the services of a lettings agent, it is vital
that you find a reputable firm. The OFT report has highlighted the lack
of regulation in the sector and, as a result, it is all too easy to be
sucked in by cowboy agents.

You may wish to consider talking to your local Association of
Residential Letting Agents (ARLA). ARLA is the best-known professional
association for lettings agents, and their members are required to sign
up to a code of conduct on which they are periodically tested.
Membership of ARLA, or its rival the UK Association of Letting Agents,
is as close as you can currently get to a professional seal of approval.

Finally, it is important to remember that the quality of your property
is paramount. Even the world’s best agent will not be able to secure a
good price or reliable tenants if the property is not up to scratch. If
you think yours needs some work, you may also wish to read our article
on cheap ways to upgrade your rental property.